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Issues: Whether the Union of India could be said to be carrying on business at the seat of the Central Government in New Delhi for the purposes of territorial jurisdiction under Section 20 of the Code of Civil Procedure.
Analysis: The expression "carries on business" in Section 20 was read broadly and not confined to commercial activity or profit-making ventures. The provision was treated as applying to juristic persons and public authorities as well, and the reasoning drew support from the constitutional recognition that the State may engage in trade, business and other activities under Article 298 of the Constitution of India. The distinction between regal and non-regal functions did not exclude all governmental activity from the concept of business, and the Union was held to conduct its affairs through the Central Government at its principal seat of control. The nature of the dispute, arising from contracts connected with ordnance factory expansion and construction work, was also treated as activity capable of falling within the ambit of business for jurisdictional purposes.
Conclusion: The Union of India was held to be carrying on business at New Delhi, and the Court had territorial jurisdiction to entertain the proceedings.